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Attention Oligopoly

Author

Listed:
  • Valletti, Tommaso
  • Prat, Andrea

Abstract

We model digital platforms as attention brokers that have proprietary information about their users' product preference and sell targeted ad space to retail product industries. Retail producers - incumbents or entrants - compete for access to this attention bottleneck. We discuss when increased concentration among attention brokers results in a tightening of the attention bottleneck, leading to higher ad prices, fewer ads being sold to entrants, and lower consumer welfare in the product industries. The welfare effect is characterized in terms of patterns of individual usage across platforms. A merger assessment that relies on aggregate platform usage alone can be highly biased.

Suggested Citation

  • Valletti, Tommaso & Prat, Andrea, 2021. "Attention Oligopoly," CEPR Discussion Papers 16231, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16231
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    Cited by:

    1. Raúl Bajo-Buenestado & Markus Kinateder & Raul Bajo-Buenestado, 2023. "Prices and Mergers in a General Model of Multi-Sided Markets," CESifo Working Paper Series 10818, CESifo.
    2. Simon Anderson & Alicia Baik & Nathan Larson, 2023. "Price Discrimination in the Information Age: Prices, Poaching, and Privacy with Personalized Targeted Discounts," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(5), pages 2085-2115.
    3. GAUTIER Axel, & LAMESCH Joe,, 2020. "Mergers in the digital economy," LIDAM Discussion Papers CORE 2020001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Carlo Reggiani & Alejandro Saporiti & Lois Simanjuntak, 2018. "Social Information and Consumer Heterogeneity," Economics Discussion Paper Series 1813, Economics, The University of Manchester.
    5. Argentesi, Elena & Buccirossi, Paolo & Calvano, Emilio & Duso, Tomaso & Marrazzo, Alessia & Nava, Salvatore, 2021. "Merger Policy in Digital Markets: An Ex Post Assessment," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 17(1), pages 95-140.
    6. Yiquan Gu & Leonardo Madio & Carlo Reggiani, 2022. "Data brokers co-opetition [The impact of big data on firm performance: an empirical investigation]," Oxford Economic Papers, Oxford University Press, vol. 74(3), pages 820-839.
    7. Jean-Marc Zogheib & Marc Bourreau, 2021. "Privacy, Competition, and Multi-Homing," EconomiX Working Papers 2021-15, University of Paris Nanterre, EconomiX.
    8. Martin Peitz & Anton Sobolev & Paul Wegener, 2023. "Ad Blocking, Whitelisting, and Advertiser Competition," CRC TR 224 Discussion Paper Series crctr224_2023_448, University of Bonn and University of Mannheim, Germany.
    9. Motta, Massimo & Peitz, Martin, 2021. "Big tech mergers," Information Economics and Policy, Elsevier, vol. 54(C).
    10. Emmanuel LORENZON, 2020. "Uninformed Bidding in Sequential Auctions," Bordeaux Economics Working Papers 2020-20, Bordeaux School of Economics (BSE).
    11. He, Peng & Shang, Qi & Pedrycz, Witold & Chen, Zhen-Song, 2024. "Short video creation and traffic investment decision in social e-commerce platforms," Omega, Elsevier, vol. 128(C).

    More about this item

    Keywords

    Digital platforms; Mergers; Targeted advertising;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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